1.

Prefatory Statement
The Philippine microinsurance industry comprises a
heterogeneous mix of actors that include microinsurance
providers and delivery channels such as commercial
insurance companies, cooperative insurance societies,
mutual benefit associations, pre-need companies, health
maintenance organizations, thrift, rural and cooperative
banks, cooperatives and non-government organizations.
In view of the unique structures and policies that govern
each of these entities, the microinsurance sector
recognizes that an appropriate Alternative Dispute
Resolution (ADR) mechanism shall be adopted on the
basis of the characteristics of each stakeholder.
Guiding principles shall facilitate the formulation of an
ADR framework to address disputes that occur within the
microinsurance sector by setting fundamental standards.
These will ensure consistency in implementation while
allowing flexibility essential to accommodate the
nuances inherent to the different stakeholders.

The use of appropriate ADR methods reduces the cost,

time, and complexity of any subsequent litigation. By
incorporating the ADR processes into the regulatory
framework governing the Philippine microinsurance
industry, the microinsurance sector is committed to
provide its stakeholders with options for resolving
disputes outside the courtroom, and minimize the
expense and delays that may accompany the judicial
process.
The microinsurance sector recognizes that existing laws
and regulations lay a crucial foundation for the effective
design and implementation of ADR processes. Among the
relevant laws and regulations are the following:

Section 2: it is the policy of the State to actively

promote and encourage the use of ADR as an
important means to achieve speedy and impartial
justice and to de-clog court dockets.

2. Rationale for ADR

Laws and regulations were passed in recent years to
encourage, if not mandate, the use of ADR to resolve
various types of disputes. The primary objective is to
provide avenues to settle disputes through the swiftest
and most accessible means.

Republic Act No. 9285 (RA 9285), The ADR Act of

2004

Republic Act No. 9520 (RA 9520), The Philippine

Cooperative Code of 2008
Article 137: disputes among members, officers, and
committee members, and intra-cooperative disputes,

Prepared by the Technical Working Group (TWG) on the Microinsurance Alternative Dispute Resolution Framework with technical
assistance and funding support from GIZ Microinsurance Innovations Program for Social Security (GIZ-MIPSS). The TWG is comprised
of representatives from the Department of Finance National Credit Council (DOF-NCC), Insurance Commission (IC), Philippine Insurers
and Reinsurers Association (PIRA), Philippine Life Insurers Association (PLIA), Philippine Mutual Benefit Association Inc. (PhilMBAI),
CLIMBS Life and General Insurance Cooperative (CLIMBS), Cooperative Insurance System of the Philippines (CISP), Microfinance
Council of the Philippines (MCPI), Rural Bankers Association of the Philippines (RBAP), RIMANSI Organization for Asia and the Pacific,
Inc. (RIMANSI) German International Cooperation-Microinsurance Innovations Program for Social Security (GIZ-MIPSS), ADB-JFPR
Microinsurance Project

Alternative Dispute Resolution Framework

shall be settled amicably in accordance with the

conciliation or mediation mechanisms embodied in
the by-laws of the cooperative and in other
applicable laws.

Rules and Regulations Implementing (IRR) Special

Provisions of RA 9520, Rule III, Section 13: in cases
where the dispute falls within the jurisdiction of the
Insurance Commission (IC), the same shall be
referred to the said agency and resolved in
accordance with the ICs regulations.
Republic Act No. 6939 (1990), The Cooperative
Development Authority (CDA) Charter
Section 8: upon request of either or both parties, the
CDA shall mediate and conciliate disputes within a
cooperative or between cooperatives.

Revised Procedures for Mediation and Conciliation

of Cooperative Disputes in the CDA (2004)
Section 5(a): matters involving the internal affairs of
the cooperative, including the rights and privileges of
members, may be the subject of mediation and/or
conciliation.

Executive Order No. 523 (2006), Instituting the Use

of ADR in the Executive Department of the
Government
Section 1. Use of Alternative Dispute Resolution: All
agencies and administrative bodies under the
Executive Department shall promote the use of
alternative modes of dispute resolution such as
mediation and conciliation as part of their practice in
resolving disputes.

Significantly, the Microinsurance Regulatory Framework

(2010) states:
7.2.3.1. Complaints involving microinsurance benefits
shall be acted upon within 5 working days upon filing
of a complaint, and a resolution shall be made within
45 working days from the time the case is submitted
for final resolution. Alternative dispute resolution
mechanisms as mutually agreed upon by the parties
concerned, may be utilized for the speedy resolution

of microinsurance cases.
Insurance Memorandum Circular 1-2010, Annex 1, I(G)
on the Key Features of a Microinsurance Contract,
further provides that disputes related to microinsurance
contracts shall be settled initially through ADR
mechanisms.
The foregoing provisions indicate the ICs commitment to
adopt ADR methods for microinsurance disputes. As
such, each microinsurance stakeholder is encouraged to
adopt an ADR system that addresses its particular
character; and, as made express by the governing laws
and policies, each stakeholder is urged to employ
mediation and/or conciliation as primary modes to
address disputes arising within their jurisdiction.
3. ADR Framework for Microinsurance Disputes
A. Guiding Principles
These principles shall guide the design and
implementation of an ADR system throughout the
industry.
(i)

SUBSIDIARITY Amicable settlement of disputes

between parties at levels closest to where disputes
occur, with the help of competent and authorized
facilitators.

(ii) PROCEDURAL FAIRNESS A quality process wherein

a third-party facilitator safeguards neutrality and
ensures mutual respect among the parties.
(iii) EMPOWERMENT
AND
SELF-DETERMINATION:
Parties are enabled to reach an independent,
voluntary and satisfactory agreement, and to abide
by such agreement in good faith.
(iv) EFFECTIVE COMMUNICATION Inside and outside
the ADR process, parties are encouraged to freely
express themselves through a productive exchange
of thoughts, opinions and ideas to arrive at a
mutually acceptable agreement.
(v) RECONCILIATION The ADR process allows parties
to reach an amicable settlement and re-build
relationships.

Alternative Dispute Resolution Framework

Proceeding from the guiding principles proposed above,

especially with respect to empowerment, procedural
fairness and reconciliation, the use of mediation and
conciliation as preferred modes of ADR is encouraged
for the microinsurance industry, where the elements of
community and personal relationships are strong.
B. Process Design Factors
These concepts shall be considered by the industry
stakeholders in adopting their respective ADR
processes.
(i) Mediation - a trained third party facilitates a
negotiation for the purpose of reaching a voluntary
agreement concluded by the parties themselves.
The mediator refrains from dispensing advice or

suggestions, and aims to guide the discussion

towards resolution by safeguarding the structure of
the process and observance of the ground rules
agreed upon.
(ii) Conciliation - While conciliation is similar to
mediation, it is distinguished by the fact that a
conciliator actively offers opinions and suggestions.
(iii) Cases to be referred to the ADR process
Disputes related to a microinsurance product or
service arising from claims and complaints are the
types of cases suitable for referral to ADR. These do
not include those cases that RA 9285 does not allow
to be compromised1.

Briefly, below is a summary of the key features of the mediation and conciliation processes:
Features
Process
Decision maker
Basis of decision
Involvement of
the parties

Role of third
party facilitator
Types of possible
outcomes

MEDIATION
Structured, with specific stages
The parties/disputants themselves
Needs and interests of all parties, rather than
demands or positions
Direct and full participation in representing
their respective interests; deciding on issues;
and creating, evaluating and agreeing on
options and solutions
Independent and impartial process facilitator
who does not give opinions, suggestions nor
judgments on disputes
Win-win situation; mutual acceptance

CONCILIATION
Less structured, following the course of the
particular negotiation
The parties/disputants themselves
Most favorable reconciliation of positions
With the guidance and suggestions of the
conciliator, direct and full participation in
agreeing on options and solutions
Usually an authority figure responsible for
seeking a solution to the dispute, who may
give opinions and advice, but not impose a
judgment
Best compromise solution acceptable to the
parties

As stated in Article 1.3 of the Implementing Rules and Regulations of Republic Act No. 9285: Exception to the Application of the
ADR Act. The provisions of the ADR Act shall not apply to the resolution or settlement of the following: (a) labor disputes covered by
Presidential Decree No. 442, otherwise known as the Labor Code of the Philippines, as amended, and its Implementing Rules and
Regulations; (b) the civil status of persons; (c) the validity of marriage; (d) any ground for legal separation; (e) the jurisdiction of
courts; (f) future legitime; (g) criminal liability; (h) those disputes which by law cannot be compromised; and (i) disputes referred to
court-annexed mediation.

Alternative Dispute Resolution Framework

(iv) Structural Elements of ADR mechanisms

(vi) Reporting

These parameters aim to unify the various ADR

processes that have been and will be established within
the microinsurance sector.

Information on the outcome of cases referred to ADR

processes shall be incorporated in the Annual Reports
submitted by insurance providers to the IC.

Least cost Dispute resolution process is affordable

for all microinsurance stakeholders.

(vii) Accreditation of Mediators and Conciliators

Accessible - All stakeholders of the microinsurance

sector must have convenient access to ADR
mechanisms at the local levels, based on clear
procedures that are easily understood.

Practical - The ADR process must be feasible and

appropriate for the microinsurance sector, taking
into account the needs of diverse stakeholders, and
existing systems and policies. Available resources
must be maximized for sustainability.

Effective - A successful ADR process will result in

mutually acceptable agreements that are durable.

Timely - Disputes will be resolved swiftly and within

the time prescribed by rules set by the regulators.

(v) Operational Elements of the Framework

a. The rules on confidentiality, competence,
impartiality, consent and self-determination,
and enforcement of settlement agreements
that will govern each ADR system shall comply
with RA 9285 and its IRR.
b. The IC shall formulate a uniform Code of
Conduct for ADR process facilitators in
consultation with various stakeholders.
c.

Practitioners of ADR within the microinsurance

sector shall abide by this Code of Conduct to
ensure that policyholders and providers alike
are granted the highest standard of service.

a. The IC shall establish an accreditation system to

level ADR skills and empower facilitators at the
earliest stages of the process to handle disputes.
b. This system will include a regular performance
evaluation of facilitators.
(viii) Information Campaign
Microinsurance providers and delivery channels shall
promote the use of mediation and conciliation as a
recourse mechanism available to all policyholders to
address any dispute.

C. Proposed ADR Processes for the Microinsurance

Sector
The ADR framework for the microinsurance sector was
designed to protect both consumers and providers by
providing them with venues to resolve disputes in a
convenient and expeditious non-adversarial manner. The
process to be offered shall be mediation and / or
conciliation that promote empowerment of the disputing
parties.
It must be noted that cooperatives have existing
Mediation-Conciliation Committees that can cater to
disputes affecting their members.
Therefore,
microinsurance disputes involving cooperatives will be
referred to the existing primary and secondary level
mechanism. Other sectors / groups that do not have a
formal Mediation-Conciliation mechanism may adopt
their own guided by the following:

Alternative Dispute Resolution Framework

Illustration A: Proposed ADR Process for Mutual

Benefit Associations (MBA)

regulatory body will apply.

b. For MBAs not affiliated with any
MBA organization, parties may
submit the case to the IC.
(ii) Cooperatives:
Complainants in the cooperative sector are categorized
into three types with each having its own process of
resolution:

a. Members of Primary Cooperatives

Filing a
case

(i) Mutual Benefit Associations (MBA):

Filing a
All members of an MBA may file a
case
complaint with their respective MBA
where a roster of IC accredited
facilitators shall be provided.
Third Party Only IC Accredited facilitators may
Facilitator
handle Mediation Conciliation cases
Venue for
Mediation Conciliation proceedings
ADR
shall be held within the respective MBA.
Parties to a Only complainants and respondents
case
directly involved in the case must be
present during the course of the
proceedings. Authorized representatives
shall present a Special Power of Attorney
prior to signing any agreement. Should
parties wish to bring legal counsel, the
legal counsel shall not actively
participate in the proceedings and only
act as an observer.
Appeals
Each level of the appeals mechanism
mechanism may apply only upon presentation of the
in
Certificate of Non-Resolution. MBAs are
unresolved further categorized into affiliated and
cases or
non-affiliated:
where
a. For MBAs affiliated with an MBA
parties
organization, parties may submit the
decline
case to their respective organization.
ADR
Should cases remain unresolved at
this level, a third stage is available at
the IC where the rules of the

A member may file a complaint with his

respective cooperative, where a roster of
accredited facilitators shall be provided.
Third Party Conciliation-Mediation Committee of the
Facilitator
cooperative.
Venue for
Proceedings shall be held within the
ADR
respective cooperative.
Parties to a Only complainants and respondents
case
directly involved in the case must be
present during the course of the
proceedings. Authorized representatives
shall present a Special Power of Attorney
prior to signing any agreement. Should
parties wish to bring legal counsel, the
legal counsel shall not actively participate
in the proceedings and only act as an
observer.
Appeal
Upon presentation of the Certificate of
mechanism Non-Resolution, parties may file to a
in
second level process with the cooperative
unresolved insurance society they are affiliated with.
cases or
where
Should cases remain unresolved, a third
parties
level is available with the IC-upon
decline
presentation of the Certificate of NonADR
Resolution.
b. Primary Cooperatives with group policies
Filing a
All primary cooperatives may file a
case
complaint with the cooperative insurance
society they are affiliated with.
Third Party Conciliation-Mediation Committee
Facilitator
Venue for
Proceedings shall be held within the
ADR
respective cooperative insurance society

Alternative Dispute Resolution Framework

Parties to a
case

Only complainants and respondents

directly involved in the case must be
present in all sessions. Authorized
representatives shall present a Special
Power of Attorney prior to signing any
agreement. Should parties wish to bring
legal counsel, the legal counsel shall not
actively participate in the proceedings
and only act as an observer.
Appeal
Upon presentation of the Certificate of
mechanism Non-Resolution, parties may elevate the
in
dispute to a second level process with the
unresolved IC.
cases or
where
parties
decline
ADR
c. Cooperative members who purchase a commercial
group microinsurance product of the primary
cooperative
Filing a
case
Third Party
Facilitator
Venue for
ADR
Parties to a
case

All members may file a complaint with

their respective cooperatives.
Conciliation-Mediation Committee

Proceedings shall be held at the office of

the cooperative.
Only complainants and respondents
directly involved in the case must be
present in all sessions.
Authorized
representatives shall present a Special
Power of Attorney prior to signing any
agreement. Should parties wish to bring
legal counsel, the legal counsel shall not
actively participate in the proceedings
and only act as an observer.
Appeal
Upon presentation of the Certificate of
mechanism Non-Resolution, parties may submit the
in
dispute to the ADR unit of the insurance
unresolved provider where an IC Accredited
cases or
Facilitator shall handle this second level
where
process.
parties
decline
Should cases remain unresolved, a third
ADR
level is available with the IC upon
presentation of a Certificate of NonResolution.

6
Illustration B: Proposed ADR Process for Cooperatives:

(iii) Life and Non-Life Commercial Insurance Providers:

Policyholders of life & non-life products purchased from
agents or brokers of insurance providers may follow this
ADR model:
Filing a
case
Third Party
Facilitator
Parties to a
case

Venue for
ADR

Policyholders may file their complaints

with the Mediation-Conciliation unit of
their respective insurance provider.
IC Accredited Facilitator
Only complainants and respondents
directly involved in a case must be
present in all sessions.
Authorized
representatives2 shall present a Special
Power of Attorney prior to signing any
agreement. Should parties wish to bring
legal counsel, the legal counsel shall not
actively participate in the proceedings
and only act as an observer.
Proceedings shall be held at the office of
the third party facilitator located within
the municipality or city of residence
stated in the policy contract. Should a

Should an officer of the head office not be available to

attend the proceedings, the company may opt to send local
representatives such as Agents, heads of Sales Units, Branch
Officers and adjusters (in the case of non-life companies).

Alternative Dispute Resolution Framework

third party facilitator not be available or if
parties do not prefer to use the available
facilitator/s, parties may choose from the
roster of facilitators in neighboring cities
or municipalities. The proceedings may be
held in a public office or space, provided
it is agreed upon by all parties.
In case the party changes residence, a
Barangay Certification shall be submitted
to update the venue of MediationConciliation.
Appeal
Upon presentation of the Certificate of
mechanism Non-Resolution, parties may elevate the
in
case to a second level process with the IC.
unresolved
cases or
where
parties
decline
ADR

7
Illustration C: Proposed ADR Process for Life and NonLife Commercial Insurance Providers:

For further information please contact:

The National Credit Council Secretariat
Department of Finance
th
4 Floor, Executive Tower Building
Bangko Sentral ng Pilipinas complex
Roxas Boulevard, Manila
Telephone Numbers: +63 2 523 3825/+63 2 525 0497
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